Workers’ compensation insurance is an integral part of the business landscape. Most U.S. states require some form of this valuable employee insurance protection, providing financial compensation for workers injured on the job. There are several different benefits available under most workers’ comp plans; the type of compensation can depend on the circumstances resulting in injury, the severity of the workplace-related injury, and many other factors. The following is a guide to the types of compensation available under the typical workers’ compensation insurance plan. The goal of this guide is to help business owners, managers, and employees to better understand the value and protection afforded by this crucial insurance.
Workers’ Compensation: A Brief Overview
With a history going back thousands of years to ancient Sumeria, the concept of compensating a worker injured on the job eventually became an important part of the business world. It wasn’t until 1911 that the United States’ first workers’ comp law passed; Wisconsin holds the distinction of being the first state to provide wage and medical compensation to injured employees. Other states quickly followed suit, and today, virtually all states have some form of workers’ comp program in place.
Both employees and employers benefit from workers’ comp insurance. Employees receive monetary benefits for injuries, while employers are protected from the high expenses associated with occupational-related injuries, including legal defense and settlements or verdicts resulting from a liability lawsuit. Under most state plans, employees forfeit the ability to sue an employer for workplace-related injuries in exchange for benefits should an injury occur.
The Four Major Benefit Types of Workers’ Compensation Insurance
Under most workers’ compensation insurance plans, there are four major types of benefit for employees injured in the course of their scope and duties of work. These four benefit types are:
- Medical care, including hospital stays and specialty medical treatments. Workers’ comp benefits typically cover surgeries and medication, pain management therapy, and counseling services as well.
- Rehabilitation coverage that helps pay for costs associated with physical therapy or other therapeutic treatments designed to help an injured employee overcome his or her injuries and return to work as quickly as possible. If an injury should result in permanent inability to return to work, many state plans allow for financial compensation associated with retraining, tuition, and vocational guidance to help injured employees to gain skills for another job.
- Disability benefits for those employees who receive an on-the-job injury and are unable to return to work. Within disability benefits are four categories: permanent total disability, permanent partial disability, temporary total disability, and temporary partial disability.
- Death benefits are designed to provide financial compensation for those who were dependent on an injured employee’s income and that employee died as a result of his or her injury. Typically, children and surviving spouses are eligible to receive death benefits under most workers’ comp plans. Benefits cover lost income and may help to pay for funeral expenses as well.
There may be time limits imposed by states that determine the length of time injured employees can receive disability benefits. The total amount of benefits is determined by the employee’s pre-injury salary and earning potential.
Employees Not Covered Under Workers’ Compensation Insurance
Every state has its own laws and guidelines when it comes to eligible employees and the benefits they may receive if they should become injured on the job. Some smaller companies, such as those with less than five employees, may not be required to carry workers’ comp insurance. Other employee classes are often excluded, including:
- Independent Contractors
- Casual/seasonal workers
- Maritime and railroad employees
- Employees in private home settings (gardeners, maids, au pairs, etc.)
- Business owners
Federal employees are covered under federal workers’ compensation insurance programs; injured federal employees cannot receive double coverage under state laws and are therefore excluded from states’ programs. There are many other exclusions; speaking to a qualified workers’ comp insurance attorney or insurance provider can help to answer any questions about the need for coverage depending on workforce levels and other factors.
It is imperative that business owners understand whether or not they need to implement a workers’ comp plan to meet state laws. Smaller companies may still choose to invest in workers’ comp insurance even if not required; this valuable protection is especially beneficial for workplaces with a high number of risks or occupational hazards.
About Caitlin Morgan
Caitlin Morgan specializes in insuring assisted living facilities and nursing homes and can assist you in providing insurance and risk management services for this niche market. Give us a call to learn more about our programs at 877.226.1027.